Taiwan's inflation rate eases to over 4-year low

Taipei, June 5 (CNA) Taiwan's consumer price index (CPI) in May rose 1.55 percent from last year, the lowest in four years and two months, due mainly to falling food and oil prices, the Directorate General of Budget, Accounting and Statistics (DGBAS) reported Thursday.

The CPI was also down 0.27 percent from April, and declined 0.14 percent after seasonal adjustments, data compiled by the DGBAS showed.

The pace of the year-on-year CPI growth in May moderated compared with the 2.03-percent growth in April, DGBAS specialist Tsao Chih-hung (曹志弘) said at a news briefing.

This was mainly due to more stable weather recently, which led to a moderate hike in fruit prices and a shift in vegetable prices from rising to falling. These factors reduced the overall increase in food prices. In addition, the continued decline in international crude oil prices also contributed to a slowdown in the CPI growth rate, Tsao explained.

Tsao observed that although the increase in rents and medical expenses moderated, the cost of dining out remained relatively high in May.

As for core CPI, which excludes fruit, vegetables and energy, Tsao said it stood at 1.61 percent, remaining below the 2 percent alert level set by the central bank for 14 consecutive months, indicating that overall price trends are relatively stable, according to Tsao.

However, he noted that although CPI growth moderated in May, the year-on-year growth rate of dining-out expenses still reached 3.5 percent, with the increase continuing to expand, marking a 15-month high.

However, Tsao said that since electricity prices were not increased in April this year, it is expected that the growth of dining-out expenses will not expand significantly and should gradually slow down. It will still take some time for dining-out inflation to fall below 3 percent, he added.

Looking ahead, the year-on-year CPI growth rate in June might be slightly lower than in May, mainly due to the higher base effect caused by last year's Dragon Boat Festival falling in June, Tsao added.

Tsao also said that inflation in the second half of this year may remain below 2 percent, with typhoon-related factors already taken into account.

He attributed the projection mainly to stable international oil prices and favorable exchange rate factors, which have reduced import costs for businesses.

Meanwhile, the producer price index (PPI) fell 4.3 percent from a year earlier in May, while the import price index dropped 9.05 percent in Taiwan dollar terms, both reaching their lowest levels in nearly two years, the DGBAS said.

Tsao explained this was mainly because of the 7.09 percent year-on-year appreciation in the Taiwan dollar against the U.S. dollar, which has helped ease import costs for businesses.

This cost relief is expected to be gradually reflected in domestic prices in the next one to two quarters, potentially alleviating pressures for businesses to push prices upward, he added.